RED HERRING PROSPECTUS Dated August 24 ... - Globus Spirits

Distribution of IMFL is also regulated in some states either through auctions or through
government procurement agencies. These regulations create monopolistic environment, stifle
entrepreneurship spirit and hamper growth.
The industry is also constrained to cope with a ban on advertising of products. Advertising, the
most effective tool for building brands and communication about products, has been denied to
the liquor industry.
In earlier years the policy of the Indian government was to discourage the consumption of
alcoholic beverages. This even went so far as to involve total prohibition in some states.
However, the resulting problems of illicit distillation, the leakage of government excise revenue
and the problems involved in enforcement, led to a review of this policy. The importation of
potable alcohol is subject to government licensing. (Source: Ministry of Food Processing
Industries; http://mofpi.nic.in/industryspecificinformation/beer/beer.htm
Within India itself, the policy of alcohol retail differs from state to state. While some states like
Maharashtra, Uttar Pradesh, and Tamil Nadu have a liberal policy, some states like Haryana and
Andhra Pradesh have had very bitter experiences in trying to make these states dry and have
eventually had to withdraw the policy. (Source: Ministry of Food Processing Industries;
http://www.ccsindia.org/ccsindia/RP01_6.html
The policy for distillation of alcohol has been announced vide Press Note 4 (2006) according to
which FDI upto 100% is permitted on the automatic route for distillation & brewing of alcohol
subject to licensing by the appropriate authority.
No industrial license is required for almost all of the food & agro processing industries except for
some items like: beer, potable alcohol & wines, cane sugar, hydrogenated animal fats & oils etc.
and items reserved for exclusive manufacture in the small scale sector. Items reserved for S.S.I.
include pickles & chutneys, bread, confectionery (excluding chocolate, toffees and chewing-gum
etc.), rapeseed, mustard, sesame & groundnut oils (except solvent extracted), ground and
processed spices other than spice oil and olioresins, sweetened cashew nut products, tapioca
sago and tapioca flour. Uses of foreign brand names are now freely permitted. MRTP (Monopolies
& Restrictive Trade Practices Act) rules and FERA (Foreign Exchange Regulation Act) regulations
have been relaxed to encourage investment and expansion by large corporates.
FISCAL POLICY & TAXATION:
Corporate taxes have been reduced and there is a shift towards market related interest rates.
There are tax incentives for new manufacturing units for certain years, except for industries like:
beer, wine, aerated water using flavouring concentrates, confectionery & chocolates etc.
(Source: Ministry of Food Processing Industries, Government of India)
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